Teacher Pension Workshop: Connecting Evidence-Based Research to Pension Reform

For more than a decade, California state and local governments have faced a growing pension challenge. Public pension plans throughout the state provide generous benefits, yet are funded on the basis of policies and assumptions that can delay recognition of their true cost. This has led to local and state government pension contributions that have already increased substantially, both in dollar terms and as a share of operating expenditures, and that will almost certainly continue to increase over the next one to two decades. This Working Paper focuses on this challenge through multiple case studies, covering both state and local governments. The case studies demonstrate a marked increase in both employer pension contributions and unfunded pension liabilities over the past 15 years, and they reveal that in almost all cases that costs will continue to increase at least through 2030, even under the assumptions used by the plans' governing bodies—assumptions that critics regard as optimistic. It examines the impacts of increased pension contributions on other expenditures, including services traditionally considered part of state and local government's core mission. Pension costs have crowded out and will likely to continue to crowd out resources needed for public assistance, welfare, recreation and libraries, health, public works, other social services, and in some cases, public safety.